Match Group Posts Strong Q2 Results, Driven by Growth from Tinder
Tinder Gold, the company’s new members-only premium subscription, contributed to an average paid member count over 2 million.
Last month Match Group (NASDAQ: MTCH), which owns a portfolio of 45 brands including Match.com, Tinder, PlentyofFish and other dating sites, posted strong second quarter financials for 2017. The company reported revenue of $310 million, a 12 percent increase over the same period last year, driven by 15 percent growth in average paid member count (PMC) to 6.1 million. In its earnings announcement, Match Group reported that average PMC at Tinder exceeded 2 million for the first time, representing an 86 percent increase over the same period last year. This is due, in part, to the launch of Tinder Gold, a members-only premium subscription Tinder started testing this summer.
Other highlights for the quarter include:
- Operating expenses were $227 million, compared to $198 million for the same period last year.
- Operating cash flow for the first six months of the year was $153 million, a 27 percent increase. Free cash flow grew to $138 million, a 36 percent increase.
- Adjusted net income was $48.2 million, and adjusted earnings per share were $0.16.
- Average paid member count was 6.1 million, compared to 5.3 million for the same period last year.
- Average revenue per paying user (ARPPU) was $0.53, compared to $0.54 for the same period last year. The slight decline was due to foreign exchange rates.
- Match North America continued a product roll-out and marketing campaign, and announced the launch of Match Stories which includes video profiles.
- A new brand was launched in Europe, targeting singles over 50.
‘Q2 was another strong quarter for Match Group,’ said Gregg Blatt, chairman and CEO of Match Group, in a press release. ‘We have solid product momentum across our brands and are executing well on our strategy. Tinder’s exceptional growth continues as product iteration increases and Match North America is progressing toward a return to paid member growth.’
Tinder is at the center of Match Group’s growth, likely due to the release of its Tinder Gold product which was rolled out in June. Initially tested in Argentina, Australia, Canada and Mexico, Tinder Gold will be rolled out globally this month. For $5 a month, Tinder Gold subscribers get access to existing Tinder Plus features plus a new ‘Likes You’ feature which lets subscribers see who has already liked (right-swiped) them.
Match Group is improving other products too. According to Match Group’s investor presentation, PlentyofFish has a new ‘Spark’ feature which is increasing reply rates by 20 to 30 percent. The company has also launched a new TV campaign to promote the app, and Match Group says the early results are promising. OKCupid rolled out a photo commenting feature, and its metrics are showing a 14 percent increase year-over-year in retention. In fact, its conversion rate is the highest it has been in three years.
Match Group provided the following guidance for the third quarter:
- Total revenue will range between $322 million and $332 million.
- Adjusted EBITDA will range between $110 million and $115 million.
- The company expects paid member count to continue to be strong for Tinder and match.
When Match rolled out Tinder Gold in the United States, it boosted Tinder to the top spot in Apple’s App Store, as the top grossing app, according to App Informers. App Informers also said that you must subscriber to Tinder Plus to buy Tinder Gold, so it will actually cost $14.99 a month to get the full benefits of Tinder Gold. For now, Tinder Gold is only available on iOS, but an Android version will be available in a month or so, says App Informers.
Match investors are also reacting positively to the company’s success. The day financials were posted, August 1, stock was valued at $18.24 per share. The following day, when the earnings call was held, stock closed at $19.01. Yesterday at 3:38 PM Eastern, Match stock was valued at $23.05 per share.
Match Group says it is the leading dating product on the market, and it seems that they do, indeed, know their market. While Tinder Gold doesn't sound like it offers a lot more than Tinder Plus, early sales are showing that the 'Likes You' feature is a winner. It reminds me a bit of junior high, when you'd ask a friend to find out if the person you liked also liked you, but it seems to be working. Match has turned Tinder into Gold.